Overdrive Extra

Jack Roberts

Could Navistar lawsuit provide long-sought clarity?

| April 09, 2013

The news breaking over the weekend that lawsuits filed against Navistar alleging the company and some of its management team misled investors and broke state and federal investment laws is a glaring reminder that as hard as the Lisle, IL, company is working to put its EGR ghosts to rest, fallout from that failed technology push is still raining down upon its head. And that may continue for a while.

It must be tough for the Navistar team on the job now, working hard to turn the company’s fortunes around. Because, it has to be said, that since the departure of CEO Dan Ustian and other members of his management team, Navistar has ushered in a new era of transparency when talking to journalists like me, has owned up to past mistakes and reaffirmed its commitment to do whatever is right by its customers and shareholders in terms of new product development and reliability as well as warranty claims and service issues. And everything I’ve seen since the “course change” last year leads me to believe the company is making a good-faith effort to do those very things. It must feel like one step forward and two back, at times, for those dedicated employees.

On the other hand, it’s wishful thinking to assume that Navistar will be able to simply walk away from the massive mess created by Ustian and others without paying a pound or two of flesh. Even worse, the national mood these days is decidedly unsympathetic when it comes to corporate investment charades and financial finagling in general.

Coupled with that is the fact that the Securities and Exchange Commission – the Federal agency tasked with regulating and policing our nation’s financial markets – is reportedly looking into charges that Ustian and current Navistar Chief Financial Officer Andrew Cederoth sold their personal shares of company stock for record gains at a time when the company was artificially inflating its stock price by withholding crucial performance information from its shareholders. It’s not a pretty picture and one that can only add to Navistar’s woes if the allegations are proven to be true.

Should the lawsuit proceed, it’s likely that testimony could finally answer questions that have kept the trucking industry buzzing for years now: Just what the hell was Navistar thinking when they opted to launch their own engine family (a risky enough venture in its own right) and then compound that risk by gambling on a technology path that every other diesel engine manufacturer on the planet had rejected as impractical – if not downright impossible?

Did Ustian and his team really think they could pull it off? Or were they betting the farm on “pie in the sky” outcomes and simply trying to buy time and placate investors until a small miracle occurred? Maybe they thought SCR wouldn’t work? Or maybe some exotic technology from overseas would sail in to save the day? Or perhaps one of their lawsuits against CARB or the EPA would produce an 11th hour victory?

Right now, we don’t know what was on their minds. But perhaps some hard answers will be coming soon.

  • http://www.facebook.com/profile.php?id=100001973262655 Myron Lind

    You don’t have to study very deep into a diesel technology textbook to find out that as the combustion becomes more efficient, certain pollutants also increase. For a truck manufacturer (as opposed to a engine manufacturer) to claim a special insight that more or less contradicts this well documented process should have been a huge red flag for all truck buyers. On top of that, the fact that Navistar was meeting emission requirements with credits rather than actual emissions should have steered any savvy buyer to “anything EXCEPT Navistar”. While I hope these guys win their lawsuit against Navistar, I also have to ask “what the hell were THEY thinking when they bought these trucks?!”. I’m just a one truck O/O and I knew it.

  • Kal Bergstrom

    Time will tell, but looking down the road, is it really wise for every major engine manufacture to be using the same technology? More so, if our EPA was not so closed minded should they not only have welcomed competing technologies, but encouraged them? Granted, Navistar evidently will still off the required standard by some degree, but somewhere in this whole saga I smell a rat and possible collusion between the EPA and Navistars competitors.

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